{ "@context": "https://frontierpicks.com/schemas/dossier.v1.json", "ticker": "CHDN", "name": "Churchill Downs, Incorporated", "url": "https://frontierpicks.com/dossiers/CHDN/", "json_url": "https://frontierpicks.com/dossiers/CHDN.json", "status": "WATCHLIST", "current_conviction": "MEDIUM", "archetype": { "code": "a7", "n": 7 }, "current_thesis": "Churchill Downs' growing Kentucky machine profit, record third quarter and $750 million buyback outweigh its shrinking Virginia machine revenue; monthly state figures and the fourth-quarter report expected around 25 February 2027 decide whether that decline stays contained.", "invalidation_trigger": "A daily close below $88, near the 200-day moving average, which would give back a large part of the post-report advance. A second straight year-on-year decline in Virginia HRM adjusted EBITDA at the Q4 2026 report would also break the case.", "catalyst_date": null, "portfolio": null, "pick": null, "themes": [ "travel-leisure" ], "tags": [], "sources": [], "caveats": [], "source_links": [ { "title": "CDC Gaming Reports", "url": "https://cdcgaming.com/virginia-hhrs-decline-in-october/", "date": "2026-11-05" }, { "title": "CDC Gaming Reports", "url": "https://cdcgaming.com/churchill-downs-third-quarter-results-up-across-the-board/", "date": "2026-10-28" }, { "title": "Churchill Downs Reports Record Q3 Revenue Of $696M", "url": "https://www.gambling.com/us/news/churchill-downs-posts-record-q3-revenue", "date": null }, { "title": "Voters reject Rosie's in Pulaski, Amherst County", "url": "https://virginiabusiness.com/rosies-gaming-pulaski-amherst-county-voters-reject/", "date": null }, { "title": "Amherst, Pulaski voters reject Rosie's gaming referendum; Amherst fails by under 200 votes", "url": "https://wset.com/news/local/amherst-pulaski-voters-reject-rosies-gaming-referendum-amherst-fails-by-under-200-votes", "date": null }, { "title": "Pulaski County voters reject Rosie's Gaming Emporium referendum", "url": "https://www.wdbj7.com/2026/11/04/pulaski-county-voters-reject-rosies-gaming-emporium-referendum/", "date": "2026-11-04" }, { "title": "CDC Gaming Reports", "url": "https://cdcgaming.com/virginia-hhr-slump-in-august/", "date": null }, { "title": "CDC Gaming Reports", "url": "https://cdcgaming.com/petersburg-casino-saps-virginia-hrm-revenue-in-july/", "date": null } ], "evidence": [ { "claim": "Virginia HRM revenue fell 5.6% in October 2026 at a blended rate and fell 2% excluding Richmond", "source": "CDC Gaming, 'Virginia HHRs decline in October', 2026-11-05", "as_of": "2026-10-31" }, { "claim": "Richmond-area Rosie's revenue fell 17.8% to $10.4 million in October 2026, or $284 per machine per day; The Rose rose 5.7% to $15.2 million", "source": "CDC Gaming, 'Virginia HHRs decline in October', 2026-11-05", "as_of": "2026-10-31" }, { "claim": "Q3 2026 net revenue $696M (+2% year on year); adjusted EPS $1.23 vs $1.09; adjusted EBITDA $264M vs $262M", "source": "Churchill Downs Q3 2026 earnings release (8-K exhibit 99.1)", "as_of": "2026-10-28" }, { "claim": "Virginia HRM adjusted EBITDA fell $6M year on year in Q3 2026, attributed to competition and a new $5M tax effect effective July 1, 2026", "source": "Churchill Downs Q3 2026 earnings release", "as_of": "2026-10-28" }, { "claim": "Kentucky HRM revenue rose $11M and adjusted EBITDA rose $6M year on year in Q3 2026", "source": "Churchill Downs Q3 2026 earnings release", "as_of": "2026-10-28" }, { "claim": "Board authorized a $750M share repurchase program, replacing the prior plan with $306M remaining", "source": "Churchill Downs press release", "as_of": "2026-10-27" }, { "claim": "Unofficial results showed 50.66% opposed to parimutuel wagering in Amherst County (7,057 against, 6,874 for) and 56.46% opposed in Pulaski", "source": "Virginia Business, Rosie's referendum report", "as_of": "2026-11-04" }, { "claim": "BofA Securities raised its price target to $105 from $100 and kept its positive rating", "source": "BofA Securities target change, reported by fiscal.ai", "as_of": "2026-11-02" } ], "view_changes": [], "frame": null, "filed_numbers": { "as_of": "2026-11-13", "sector": "Consumer Cyclical", "financials": { "status": "ok", "reason": null, "close_date": "2026-11-13", "latest_quarter": "2026-09-30", "figures": { "revenue": { "status": "ok", "quarters": [ { "end": "2026-09-30", "filed": "2026-10-28", "restated": null, "value_musd": 696, "yoy_pct": 1.9 }, { "end": "2026-06-30", "filed": "2026-07-29", "restated": null, "value_musd": 980, "yoy_pct": 4.9 }, { "end": "2026-03-31", "filed": "2026-04-22", "restated": null, "value_musd": 663, "yoy_pct": 3.1 }, { "end": "2025-12-31", "filed": "2026-02-25", "restated": null, "value_musd": 665.9, "yoy_pct": 6.7 }, { "end": "2025-09-30", "filed": "2025-10-22", "restated": null, "value_musd": 683, "yoy_pct": 8.7 }, { "end": "2025-06-30", "filed": "2025-07-23", "restated": null, "value_musd": 934, "yoy_pct": 4.9 } ] }, "gross_margin": { "status": "not reported" }, "operating_margin": { "status": "ok", "quarters": [ { "end": "2026-09-30", "filed": "2026-10-28", "restated": null, "pct": 20.5 }, { "end": "2026-06-30", "filed": "2026-07-29", "restated": null, "pct": 36.4 }, { "end": "2026-03-31", "filed": "2026-04-22", "restated": null, "pct": 21.6 }, { "end": "2025-12-31", "filed": "2026-02-25", "restated": null, "pct": 18.5 }, { "end": "2025-09-30", "filed": "2025-10-22", "restated": null, "pct": 14.3 }, { "end": "2025-06-30", "filed": "2025-07-23", "restated": null, "pct": 35 } ] }, "pretax_income": { "status": "ok", "end": "2026-09-30", "filed": "2026-10-28", "value_musd": 111 }, "net_income": { "status": "ok", "end": "2026-09-30", "filed": "2026-10-28", "four_quarters_end": "2026-09-30", "value_musd": 80, "four_quarters_musd": 455.3 }, "operating_cash_flow": { "status": "ok", "end": "2026-09-30", "filed": "2026-10-28", "first_end": "2025-12-31", "value_musd": 756 }, "capital_spending": { "status": "ok", "end": "2026-09-30", "filed": "2026-10-28", "first_end": "2025-12-31", "value_musd": 152 }, "free_cash_flow": { "status": "ok", "end": "2026-09-30", "filed": "2026-10-28", "first_end": "2025-12-31", "value_musd": 604 }, "diluted_share_change": { "status": "ok", "end": "2026-09-30", "filed": "2026-10-28", "base_end": "2025-09-30", "pct": -1.4 }, "cash": { "status": "ok", "end": "2026-09-30", "filed": "2026-10-28", "value_musd": 167 }, "debt": { "status": "ok", "end": "2026-09-30", "filed": "2026-10-28", "value_musd": 4722, "composition": "non-current long-term debt plus current maturities" }, "net_cash": { "status": "ok", "end": "2026-09-30", "filed": "2026-10-28", "value_musd": -4555 }, "deferred_revenue": { "status": "ok", "end": "2026-09-30", "filed": "2026-10-28", "value_musd": 60, "yoy_pct": 7.7 }, "backlog": { "status": "ok", "end": "2026-09-30", "filed": "2026-10-28", "value_musd": 218, "yoy_pct": -11.8 }, "receivables": { "status": "ok", "end": "2026-09-30", "filed": "2026-10-28", "value_musd": 106 }, "inventory": { "status": "ok", "end": "2026-09-30", "filed": "2026-10-28", "value_musd": 11 }, "equity": { "status": "ok", "end": "2026-09-30", "filed": "2026-10-28", "value_musd": 1379 }, "market_value": { "status": "ok", "close_date": "2026-11-13", "basis_end": "2026-10-21", "basis_filed": "2026-10-28", "value_musd": 6835.6 }, "enterprise_value": { "status": "ok", "close_date": "2026-11-13", "basis_end": "2026-10-21", "basis_filed": "2026-10-28", "value_musd": 11390.6 }, "ev_sales": { "status": "ok", "close_date": "2026-11-13", "basis_end": "2026-10-21", "basis_filed": "2026-10-28", "multiple": 3.8 }, "ev_ebit": { "status": "ok", "close_date": "2026-11-13", "basis_end": "2026-10-21", "basis_filed": "2026-10-28", "multiple": 14.9 }, "pe": { "status": "ok", "close_date": "2026-11-13", "basis_end": "2026-10-21", "basis_filed": "2026-10-28", "multiple": 15 }, "pb": { "status": "ok", "close_date": "2026-11-13", "basis_end": "2026-10-21", "basis_filed": "2026-10-28", "multiple": 5 }, "fcf_yield": { "status": "ok", "close_date": "2026-11-13", "basis_end": "2026-10-21", "basis_filed": "2026-10-28", "pct": 8.8 } } }, "short_interest": { "status": "ok", "settlement": "2026-10-15", "published": "2026-10-26", "short_pct_of_outstanding": 8.02, "days_to_cover": 4.4, "change_pct": 11.4 }, "insiders": { "status": "ok", "as_of": "2026-11-15", "windows": [ { "days": 90, "status": "ok", "from": "2026-08-18", "bought_usd": 0, "sold_usd": 0, "bought_unpriced": 0, "sold_unpriced": 0 }, { "days": 365, "status": "ok", "from": "2025-11-16", "bought_usd": 0, "sold_usd": 0, "bought_unpriced": 0, "sold_unpriced": 0 } ] } }, "body_markdown": "## Current Thesis\n\nChurchill Downs' shares are more likely than not to beat the S&P 500 over the next three months. Growing Kentucky machine profit, a record third quarter and a new $750 million buyback outweigh a Virginia machine business that is still shrinking. Monthly state revenue figures through December and the fourth-quarter report, expected around 2027-02-25, show whether the Virginia decline stays contained.\n\nThe rating is Medium because the most recent state figures narrowed the Virginia decline while Kentucky kept growing. On 2026-11-05 CDC Gaming reported that revenue from Virginia's historical racing machines (HRMs), all of which Churchill Downs owns, fell 5.6% in October at a blended rate and 2% excluding Richmond. CDC Gaming had reported a 10% same-store fall for August.\n\nThe 2026-10-28 release showed record net revenue of $696 million, up 2%, and adjusted earnings per share (EPS) of $1.23, against $1.09 a year earlier and Benzinga's $1.15 estimate. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $264 million, against $262 million.\n\nThe price already reflects the report: the shares closed at $100.64 on 2026-11-11, up 13.1% over three months from the 2026-10-07 closing low of $73.95, and within $5 of BofA Securities' $105 target.\n\n## Bull Case\n\n- **Virginia's decline narrowed in October.** CDC Gaming reported a 5.6% blended fall for October on 2026-11-05, after same-store falls of 11.7% in July and 10% in August. The Rose in Northern Virginia led the state with $15.2 million of October revenue, up 5.7%.\n- **Kentucky machines are still growing.** Kentucky HRM revenue rose $11 million and adjusted EBITDA rose $6 million year on year in the third quarter, according to the 2026-10-28 release. CDC Gaming reported on 2026-10-29 that Kentucky HRM revenue rose 11% in September.\n- **Gaming and wagering both grew profit.** Gaming adjusted EBITDA rose to $128 million from $123 million in the third quarter (2026-10-28 release). Wagering Services and Solutions rose to $48 million from $46 million, on TwinSpires horse-racing handle of $485 million against $472 million.\n- **Capital return is getting bigger.** On 2026-10-27 the board approved a $750 million repurchase program, replacing the old plan with $306 million remaining. The quarterly dividend rises 7% to $0.469 per share, payable 2027-01-05.\n- **Nine-month earnings grew.** Adjusted EBITDA for the first nine months of 2026 was $998 million, against $958 million a year earlier, and adjusted EPS was $5.89, against $5.26 (Q3 2026 release).\n- **Virginia footprint is being upgraded.** On 2026-10-29 the company announced it will move its Rosie's Game Room in Henry County, Virginia, to a new, larger venue near Martinsville Speedway.\n- **Analyst targets sit at or above the last close.** BofA Securities raised its target to $105 from $100 on 2026-11-02. JPMorgan moved to $120, Mizuho to $126 and Barclays to $133 on 2026-10-30.\n\n## Bear Case\n\n- **Richmond is still falling fast.** CDC Gaming reported on 2026-11-05 that Richmond-area Rosie's revenue fell 17.8% in October to $10.4 million, or $284 per machine per day, the lowest in the state. Colonial Downs fell 18.1% to $3.5 million and Emporia fell 16.3% to $1.8 million.\n- **Virginia profit is already shrinking.** Virginia HRM adjusted EBITDA fell $6 million year on year in the third quarter, mostly in Central Virginia (2026-10-28 release). The company blamed new competition and a $5 million tax effect from a structure effective 2026-07-01; CDC Gaming tied the July revenue fall to the Petersburg casino.\n- **Virginia growth sites were rejected.** Unofficial results reported by Virginia Business on 2026-11-04 showed 50.66% of Amherst County voters and 56.46% of Pulaski voters opposed parimutuel wagering. Both proposed Rosie's venues are off the table unless certification changes the Amherst result, where the margin was under 200 votes.\n- **Online casino competition is a live 2027 question.** Virginia's General Assembly session in early 2027 is expected to take up online casino gaming, which would add a competitor to the HRM venues.\n- **Revenue growth is thin.** Third-quarter net revenue of $696 million rose 2% and came in just under Benzinga's $696.6 million estimate on 2026-10-28; profit growth leans on Kentucky and cost control.\n\n## Setup & Price Structure\n\nThe shares closed at $100.64 on 2026-11-11, after $101.96 on 2026-11-10, the highest close since the third-quarter report. The 3-month change is 13.1%, measured from a close of $88.99 on 2026-08-13.\n\nOn adjusted daily closes, the 50-day moving average was $84.53 and the 200-day moving average $87.98 as of 2026-11-11. The shares trade above both, and the 50-day average is still below the 200-day after the decline into the 2026-10-07 closing low of $73.95.\n\nThe 52-week high is $118.35, set intraday on 2025-12-16; the last close is 15.0% below it. Recovering that gap depends on Virginia stabilizing, since the analyst targets above $105 assume it.\n\nSEC filings show no insider sales in the past month; the only recent Form 4 is a 454-share grant to director Douglas Grissom on 2026-09-30.\n\n## Catalyst Calendar\n\n- **~2026-11-30 (est.):** Kentucky HRM revenue for October 2026, as reported by CDC Gaming. Shows whether Kentucky growth, up 11% in September, keeps offsetting Virginia.\n- **~2026-12-04 (est.):** Virginia HRM revenue for November 2026, as reported by CDC Gaming. Shows whether October's narrower 5.6% blended decline continues or widens again.\n- **2026-12 (est.):** Certification of the Amherst County and Pulaski referendum results. Makes the rejection of both proposed Rosie's venues official; the Amherst margin was under 200 votes.\n- **~2027-01 (est.):** Virginia 2027 legislative session on online casino gaming. Legalization would add an online competitor to Churchill Downs' Virginia HRM venues.\n- **~2027-02-25 (est.):** Fourth-quarter 2026 report. Shows whether Virginia HRM profit keeps falling and whether Kentucky growth and repurchases continue to offset it.\n\n## What Would Change Our Mind\n\nA daily close below $88, near the 200-day moving average, which would give back a large part of the post-report advance. A second straight year-on-year decline in Virginia HRM adjusted EBITDA at the Q4 2026 report would also break the case.\n\nThe risks this note tracks, each with what would confirm it:\n\n- Competition from the Petersburg casino keeps eroding Central Virginia HRM profit. Confirmed by: Another year-on-year decline in Virginia HRM adjusted EBITDA at the Q4 2026 report.\n- The narrower October decline in Virginia proves temporary. Confirmed by: A monthly Virginia HRM decline above August's 10% in CDC Gaming's November or December figures.\n- Kentucky HRM growth slows and stops offsetting Virginia. Confirmed by: Flat or negative year-on-year Kentucky HRM revenue in CDC Gaming's monthly figures.\n- Virginia legalizes online casino gaming in 2027, adding competition for HRM venues. Confirmed by: An online casino bill passing the Virginia General Assembly in the 2027 session.\n- Debt-funded capital return pushes leverage higher. Confirmed by: Net bank leverage reported above 3.8x at a future quarter-end.\n\n## Correlation Notes\n\nChurchill Downs trades with regional gaming and leisure stocks and with consumer discretionary spending more broadly. Its company-specific drivers are state-level: Virginia and Kentucky HRM revenue, state tax structures and local referendums. The Kentucky Derby makes the second quarter its largest, so first-half 2027 trading will also respond to Derby week ticket and wagering news.", "first_seen": "2026-11-10", "last_analyzed": "2026-11-12T16:37:32+00:00", "last_synthesized": "2026-11-12", "date_modified": "2026-11-12", "license": "Content © FrontierPicks. Cite the canonical URL." }